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LuLaRoe in $1B lawsuit for shady business model

(BUSINESS NEWS) LuLaRoe has landed in the middle of a $1 billion lawsuit with the basis being how the company is structured.

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Multi-level marketing brands may be a quick way to make a buck for some people, but for others it may spell financial ruin.

On Monday, October 23rd, former distributors for multi-level marketing legging and athleisure brand LuLaRoe are filing suit against the company. These distributors, called “Retailers” by LuLaRoe, accuse the company of being a pyramid scheme, as defined by California law.

The 1 billion dollar suit federal class action suit, filed by three plaintiffs, seeks damages for incurring at least $20,000 dollars of debt upon its sales consultants. 80,000 of those consultants paid up front for their inventory. LuLaRoe denies all charges.

“We have not been served with the recent complaints, but from what we have seen in media reports, the allegations are baseless, factually inaccurate and misinformed,” a statement made by the company said, “We will vigorously defend against them and are confident we will prevail.”

In the brief attached to the filing, former retailers claimed that they were strongly encouraged to keep up to “$20,000 worth of inventory on hand” including “10 items in every size and style.”

The process of having new retailers consistently on the bottom of the company’s hierarchy, unable to reach higher levels and turn a profit is why the suit claims LuLaRoe’s status as a pyramid scheme.

Investigations into lawsuits of this sort are examined by the Federal Trade Commission (FTC). In a ruling in early last year, the FTC awarded damages of $200 million dollars to distributors participating in vitamin and supplement company Herbalife’s multi-level marketing business deals.

Essentially, the settlement for the 2016 Herbalife suit stated that there were two key standards for a multi-level marketing company that wants the all clear from the FTC.

First, consultants must get incentives from selling product to consumers, not just recruiting more sellers. Second, a multi-level marketer has to tell the truth about the return on investment that a consultant can receive selling the product.

According to the suit against LuLaRoe, the suit stated that one someone decided to become a consultant, “they were pressured to invest and reinvest by purchasing the Defendants’’ clothing products — regardless of whether they were able to sell the inventory.”

LuLaRoe also claimed that individual sellers could “earn full-time pay for part time work.”

In light of the suit, LuLaRoe’s website, which has subsections for “happiness,” “social responsibility,” and “making good” seems a little ironic now.

Alexandra Bohannon has a Master of Public Administration degree from University of Oklahoma with a concentration in public policy. She is currently based in Oklahoma City, working as a freelance filmmaker, writer, and podcaster. Alexandra loves playing Dungeons and Dragons and is a diehard Trekkie.

Business News

Skilled workers can live in any city they wish and still get work [study]

(BUSINESS NEWS) A 2018 study reveals that remote work is on the rise, and the ultra skilled workers can work from any city they wish.

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A 2018 study that surveyed 1,005 hiring decision makers commissioned by Upwork sheds some interesting insights on the attitudes around remote workers and the challenges hiring managers are experiencing finding talent. The remote workforce is the future after all and this study offers both insight into challenges and solutions.

It was noted that talent is becoming harder and harder to find (up to three times more difficult than in past years). Meanwhile, remote work is on the rise, according to 55 percent of managers.

The overarching attitude toward offices becoming temporary anchor points is increasing, indicating that commutes are becoming less common (albeit slightly). Companies are increasingly embracing remote work, and according to 38 percent of those surveyed, it will become the predominant workforce.

A major challenge remains that company policies aren’t caught up to remote work – they are lagging behind or non-existent according to 57 percent of organizations.

Over half of all companies surveyed are using more temporary, contract, or freelance workers and the majority of hiring managers believe agile teams will become the norm in the near future.

Perhaps the juiciest tidbit, the fact that skills are viewed as more important than location suggests that at the end of the day…

remote workforce

If you have the skills, you can live basically anywhere. Remote and freelance work offers a variety of opportunities and means you don’t have to be synchronously local to a team to get work done. This means that you don’t need to be in a big city like New York or Los Angeles to get the big work and have access to opportunity.

Companies are struggling to find talent, and despite a lack of policy support, are opening up to remote work. Adding to this challenge is that more and more Americans are less mobile, due to concerns about cost of living (or other things in our lives), hiring managers are having a harder time finding the right talent to fill their own vacancy.

Skilled workers (those who have the abilities that are in demand and desired by their industry) have the ability to pick and choose where they want to live and it looks like now and the future, companies are coming to meet them. This is good news, and offers more and more opportunities, as well as flexibility for hiring managers.

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Indeed and Glassdoor are now owned by one Japanese company – what’s next?

(TECHNOLOGY) Now that Glassdoor and Indeed are owned by an international brand, how will their main competitors (and search engines) react?

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This year, Glassdoor, one of the most popular job and recruiting sites, has been acquired by Recruit Holdings Co. Ltd. (RCRRF), a Tokyo-based firm in a $1.2 billion cash transaction to become part of Recruit’s growing Human Resources Technology segment.

Recruit Holdings operates Three areas of business: HR Technology, Media & Solutions, and Staffing. In 2012, they acquired CT-based Indeed, which continues to be the number one job site in the world. Glassdoor will continue to operate independently as a part of Recruit Holdings, which holds companies in North America, Europe, and Asia, but it is noteworthy that a Japanese company owns two of the biggest players in the job search game.

The possibilities from this merger are not yet clear, but given that Recruit holds both Indeed and Glassdoor, the opportunity for integration and grouped pricing could eventually be useful for recruiters and HR/Hiring professionals. Although the company has not formally announced that integration is a possibility, considering the stiff competition from LinkedIn Jobs – it would be a great way to gain some competitive advantage.

The acquisition could help Recruit take on Microsoft (who owns LinkedIn) and Google to keep the two from dominating the online job boards, to which are essential for job seekers and talent seekers.

Of course, nothing is set in stone, but the possibilities are there. Recruiters should consider the possibilities for pricing and plan for how they will use the platforms (and how they will integrate Google for Jobs) to best collect the candidates they need.

Job seekers be prepared for more logins and more search sites for jobs and recognize that the possibility of Google no longer indexing Glassdoor (just as Indeed is not indexing on Google jobs).

The conflict between Indeed/Glassdoor, Microsoft, Google, and maybe even Facebook (look at Facebook.com/Jobs) is going to be an interesting battle to watch. JobBoardDoctor described the conflict of Indeed vs. Google as an old-west shoot out at high noon.

I suspect that with all four players in – it’s going to be a cold war in the recruiting world. Sit tight folks. Let’s see whats next!

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Business News

This fake company weeds out crappy clients

(BUSINESS) The former CEO of Highrise used a fake website to weed out toxic clients. How can you keep problematic customers out of your business?

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Sorting through your client list to weed out potentially toxic customers isn’t a process which garners the same attention as a company removing problematic employees, but it’s every bit as important — and, in many cases, twice as tricky to accomplish. One innovative journalist’s solution to this problem was to set up a fake website to act as a buffer between unwanted clients and his inbox.

If you’re anything like Nathan Kontny, your inbox is probably brimming with unread emails, product pitches, and pleas from people with whom you’ve never met in person or collaborated; unfortunately, many of these “people” are simply automated bots geared toward generating more press for their services.

Nathan’s response to this phenomenon was to create a website called “Trick a Journalist” in order to see which potential clients would sign up for the service.

Hilariously enough, the trap worked exactly as planned. Anyone signing up for Trick a Journalist was blacklisted and prevented from signing up for Nathan’s CRM software, with Nathan’s justification being that the CRM software in question should never be used for something so egregiously predatory as Trick a Journalist.

By creating a product which sets apart unwanted clients from the rest of the pack, Nathan succeeded in both attracting and quarantining present and future threats to the integrity of his business.

While this model may not be practicable at face value, there’s an important lesson here: determining the lengths to which your clients will go to gain the upper hand BEFORE working for them is an important task, as your clients’ actions will reflect upon your product or services either way.

Ruthlessness in business isn’t unheard of, but you should be aware of your customers’ tendencies well in advance of signing off on their behavior.

Of course, one minor issue with Nathan’s model of operation is that, invariably, someone will connect Trick a Journalist to his brand and miss the joke entirely.

There are less risky routes to weeding out potentially problematic clients than blacklisting them via a satirical website — though one might argue such routes are less fun — but the end result is essentially the same: keeping unsavory clients out of your inbox and off of your product list.

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